CPCU 552 Ch. #2, CPCU 552 Ch. #3
A manufacturer leases a 10,000 square foot warehouse to store product for distribution. The lease includes a provision that the tenant is responsible for any and all damage to the landlord's property as a result of the tenant's use of the premises. A fire started by a portable space heater results in $3M worth of damages to the building. The following specifies the limits in place under the manufacturer's policy. $3,000,000 General Aggregate $3,000,000 Products-Completed Operations Aggregate $1,000,000 Per Occurrence Bodily Injury/Property Damage $300,000 Damage to Rented Premises Assuming the Commercial General Liability Form was in effect on the date of the occurrence, how much would be paid for the damages to the warehouse? A) $300,000 B) $1,000,000 C) $1,500,000 D) $3,000,000
A
A manufacturing company has been continuously insured under the occurrence version of the Commercial General Liability Coverage Form. Insurer X provided coverage during Year One, Insurer Y provided coverage during Year Two, and Insurer Z provided coverage during Year Three. In Year Three, the manufacturing company received first notice of claim from a customer who alleged an injury occurred in Year One from a defective product the company had made. Who would be obligated to provide a defense for the manufacturing company and possibly pay the claimant's damages? A) Insurer X B) Insurer Y C) Insurer Z D) Insurer X and Z
A
A project owner has a Commercial General Liability (CGL) Coverage Form that has an occurrence trigger. The project owner also requires each independent contractor that works on the project to purchase an Owners and Contractors Protective Liability Coverage Form. Which one of the following statements describes an effect of such a requirement? A) It transfers the cost of insuring exposures already covered under the CGL Coverage Form to the contractor. B) It adds the contractor as an additional insured to the CGL Coverage Form. C) It converts the project owners' CGL Coverage Form to claims-made coverage. D) It eliminates the need for the project owner to carry workers compensation insurance.
A
A robber comes into a bank and threatens to hurt one of the bank's customers if he does not give him cash. One of the bank's employees pushes the customer out of the way and restrains the robber. In doing so, the employee injures the robber. Under the bank's unendorsed Commercial General Liability policy, the robber's injury is: A) Covered because the employee was using reasonable force to protect the customer. B) Not covered because the injury was expected or intended. C) Not covered because the injury was caused by an employee. D) Covered because the employee has a duty to prevent illegal activity.
A
A sporting goods manufacturer recently issued a recall for defective basketballs. The total cost of the recall exceeded $250,000, prompting the manufacturer to submit a claim to its insurer for the recall expense. The manufacturer has an unendorsed Commercial General Liability (CGL) policy. Which one of the following statements best represents the insurability of this loss exposure on the manufacturer's CGL? A) There is no coverage due to the exclusion for the Recall of Products, Work, or Impaired Property. B) Coverage is available at the discretion of the insurer. The cost of the recall must be less than the anticipated cost of claims arising from the product defect. C) The policy will only respond to claims for the recall of Products, Work, or Impaired Property on an indemnity basis. D) The policy provides a $100,000 sub-limit for the recall of Products, Work, or Impaired Property.
A
Aircrafts, Autos, and Watercraft are excluded under the commercial general liability policy. Which one of the following is an exception to the exclusion? A) Owned watercraft that is ashore B) Owned watercraft used to carry people or property for a charge C) Non-owned watercraft 35 ft or less in length D) Owned watercraft that is entrusted to a non-family member
A
Although a broader coverage territory may apply in some cases, the coverage territory that applies to most claims in the Commercial General Liability (CGL) Coverage Form is limited to the United States (including its territories and possessions) and which of the following? A) Puerto Rico and Canada B) Puerto Rico and Mexico C) Canada and Mexico D) Canada and countries in the European Union
A
An ISO claims-made policy may contain a retroactive date. If such a date is present, it can be found in what part of the policy? A) The policy declarations B) The policy insuring agreement C) The supplemental payments section of the policy D) An endorsement added to the policy
A
For which one of these would the Damage to Your Product and Damage to Your Work exclusion eliminate coverage? A) A product that the insured incorrectly designed B) Property damage caused by an insured's defectively produced product C) Property damage caused by work performed on behalf of the insured by a subcontractor D) Property damage caused by an insured's incorrectly designed product
A
Lucy, the owner of Lucy's Flower Shop, was delivering a vase of flowers to a customer, Mrs. White. When Mrs. White opened her front door, her dog ran outside, knocking the flowers from Lucy's hands, and causing the vase to shatter and injure Mrs. White. Although the customer insisted that she would be fine, Lucy received a medical bill for injuries to Mrs. White two years later. The medical treatment had been received one week before Lucy received the bill. Lucy explains the situation to her insurer and requests coverage under her Commercial General Liability Coverage Form (CGL). Will the medical expenses be covered under Coverage C—Medical Payments of the CGL? A) No, because the medical expenses must be incurred and reported to the insurer within one year after the date of the accident. B) No, because the coverage does not apply to accidents that occur away from the insured's premises and adjacent ways. C) No, because there is no liability against the insured. D) No, because the customer was obligated to tell Lucy that she would be filing a claim within five days of the accident.
A
One of the special coverage forms available in ISO's commercial general liability program is the Liquor Liability Coverage Form. Which one of the following statements best explains the reasons that an insured might want to add the Liquor Liability Coverage Form? A) A bar might use the Liquor Liability Coverage Form to insure its loss exposure for property damage resulting from serving alcohol to customers. B) A liquor retailer might use the Liquor Liability Coverage Form to insure its exposure to employer's liability for injuries in the course of a robbery. C) A restaurant might use the Liquor Liability Coverage Form to insure its loss exposure for bodily injuries caused by its bouncers ejecting unruly patrons. D) A nightclub might use the Liquor Liability Coverage Form to insure its business interruption exposure.
A
Part A of the Commercial General Liability Coverage Form has an exclusion for electronic data. What is the purpose of this exclusion? A) To reinforce the policy definition of property damage that electronic data are not tangible property B) To eliminate coverage for damage arising from the intentional misuse of electronic data by employees C) To narrow the definition of electronic data to certain specific types of media D) To specify that liability arising from use of electronic data is limited to personal injury
A
Some ISO liability coverage forms provide only claims-made versions. Which one of the following forms is of this type? A) Electronic Data Liability Coverage Form (CG 00 65) B) CGL Coverage Form (CG 00 02) C) Liquor Liability Coverage Form (CG 00 34) D) Products/Completed Operations Liability Coverage Form (CG 00 38)
A
The Commercial General Liability (CGL) Coverage Form contains a supplementary payments section. Which one of the following statements about the provisions of the supplementary payments section of the CGL is most accurate? A) The Supplementary Payments section of the CGL promises to pay all court costs assessed against the insured in the course of the suit. B) The Supplementary Payments section of the CGL promises to pay the insured $1,000 per day for attendance and participation at any trial or hearing, up to a maximum of $50,000. C) The Supplementary Payments section of the CGL promises to pay up to $400 per day for outside counsel retained by the insured, and an unlimited amount for counsel retained by the insurer. D) The Supplementary Payments section of the CGL promises to pay any punitive damages levied against the insured as a result of the suit.
A
The Coverage B—Personal and Advertising Injury Liability insuring agreement parallels the Coverage A— Bodily Injury and Property Damage Liability insuring agreement in that the insurer agrees to: A) Defend the insured against any suit seeking such damages. B) Pay for medical expenses such as ambulance, hospital and professional nursing care. C) Pay for damages that arise from false arrest, detention or imprisonment. D) Provide coverage for liability assumed under contract.
A
The claims-made version of the Commercial General Liability Coverage Form is used only in cases in which: A) The possibility of long-tail claims is a major underwriting concern. B) The occurrence version is not available due to loss experience. C) The insured is purchasing for the first time. D) Claims are expected to be fully developed within two years.
A
The hundreds of endorsements that are available to modify the Insurance Services Office (ISO) Commercial General Liability (CGL) Coverage Form can be grouped into categories. Which one of the following categories of ISO endorsements includes endorsements for providing extended reporting periods for the claims-made version of the CGL coverage form? A) Claims-Made Endorsements (CG 27 __ ) B) Endorsements for Amending Limits (CG 25 __ ) C) Exclusion Endorsements (CG 21 __ ) D) Additional Coverage Endorsements (CG 04 __ )
A
The purpose of the aggregate limit in the Commercial General Liability (CGL) Coverage Form is to: A) Cap the total amount of damages, other than defense costs, that the insurer will pay for the entire policy period. B) Cap the amount that the insurer will have to pay for each claim that occurs during the policy period. C) Establish the highest amount of defense costs that the insurer is willing to incur in defending a lawsuit. D) Eliminate coverage for extreme severity events by limiting the amount of damages during the policy period.
A
The term "you" is used throughout the Commercial General Liability Coverage Form. "You" is defined to include: A) The named insured shown in the declarations. B) The named insured shown in the declarations and any employees of the named insured. C) The named insured and any officers or directors of the named insured's organization. D) All persons or entities who have any type of liability protection under the policy.
A
Under the ISO Commercial Lines Manual, the Nuclear Energy Liability Exclusion Endorsement must be added to which one the following types of policies? A) Any policy containing a commercial liability coverage part B) Only those commercial liability policies of organizations that produce nuclear power C) Only those commercial liability policies of organizations that use or produce any type of nuclear substances D) Only those commercial liability policies of contractors who perform work on nuclear reactors
A
Unless it is adjusted by agreement, what do the rules of ISO's Commercial Lines Manual establish as the basic limit for the damage to premises rented to you under the Commercial General Liability Coverage Form? A) $100,000 B) $250,000 C) $500,000 D) $1,000,000
A
Which one of the following is able to receive insured status on an unendorsed Commercial General Liability policy? A) An organization acquired 80 days ago, but not yet added to the policy B) A temporary worker with a claim for bodily injury C) An employee found liable for damage of the insured's property D) A past joint venture not listed on the policy
A
Which one of the following statements about the limits of coverage under the Commercial General Liability Coverage Form is true? A) Payments made for medical expenses under Part C apply to the policy's general aggregate limit. B) Under rules of the ISO Commercial Lines Manual, the Part C medical expense limit must be $25,000 or more. C) Under rules of the ISO Commercial Lines Manual, the personal and advertising injury liability limit can be no more than 50 percent of a policy's each occurrence limit. D) The products-completed operations aggregate limit and the general aggregate limit are subject to a third aggregate policy limit that applies to all claims paid under the policy.
A
Which one of these endorsements cannot be used to amend the limits of a Commercial General Liability Coverage Form? A) Supplemental Extended Reporting Period endorsement B) Amendment of Limits of Insurance endorsement C) Designated Construction Project(s) General Aggregate Limit endorsement D) Designated Location(s) General Aggregate Limit endorsement
A
Which one of these is an exclusion for an exposure that is customarily insured by a separate policy? A) Workers Compensation exclusion B) Expected or Intended Injury exclusion C) War exclusion D) Damage to Impaired Property or Property Not Physically Injured exclusion
A
XYZ Corporation has used several different insurance companies for its commercial general liability (CGL) coverage over the years. During 20X1, Able Insurance Company provided coverage, but XYZ switched to Baker Insurance Company in 20X2 and 20X3. In 20X4, XYZ switched again to Chicago Insurance Company and has maintained coverage with Chicago ever since. Each of the CGL policies was the standard ISO occurrence-based form. XYZ manufactures lawn chairs. During 20X5, a suit was filed against XYZ, alleging that one of its lawn chairs, manufactured in 20X1, was defective when it collapsed in late 20X3, injuring a child. Given this information, which one of the following statements about insurance coverage for this claim under the standard CGL is most accurate? A) The policy issued by Baker Insurance Company in 20X3 would respond to the claim because that is when the injury occurred. B) The policy issued by Able Insurance Company in 20X1 would respond to the claim because that is when the alleged defective chair was manufactured. C) The policy issued by Chicago Insurance Company in 20X5 would respond because that is when the suit was filed. D) All three of the insurance policies would respond to the claim, and any damages that were awarded would be shared equally between the three insurers.
A
On the way to the airport, a family from Washington, D.C. stops to buy a number of small toys to take on vacation. While on vacation in England, one of the children chews on a toy and chokes when a small piece of the toy breaks off. The family seeks immediate medical care in England. Upon their return to the U.S., they file suit against the toy manufacturer's U.S. distributor. Will the distributor's CGL policy cover the claim? A) Yes, because the toys were sold in the U.S and suit was filed in the U.S. B) Yes, because the family sought immediate medical care. C) No, because the injury occurred in England. D) No, because the distributor didn't manufacture the toy.
A EXLANATION: ... because the suit was filed in the U.S.
A corporation purchased an unendorsed Commercial General Liability policy with an inception date of July 1, 20X4. On August 15, 20X4, it was notified that it was being sued for injuries arising out of its advertising brochures first published on April 1, 20X4, and not used since that date. The alleged cause of action was its slanderous statements in its April 1, 20X4, brochures. Which one of these Coverage B exclusions is the correct exclusion for the insurer to use to deny coverage? A) Breach of Contract exclusion B) Material Published Prior to the Policy Period exclusion C) Criminal Acts exclusion D) Contractual Liability exclusion
B
A plumber working in a building purposely sets the building on fire. Assuming the plumber was insured by a Commercial General Liability (CGL) policy, would the building owner's claim be covered? A) Yes, because the CGL coverage form includes coverage for property damage intended by the insured. B) No, because the CGL coverage form contains an exclusion of property damage expected or intended by the insured. C) Yes, because the CGL coverage form dictates that the insurer must defend the insured in all commercial liability claims. D) No, because the CGL coverage form only provides coverage for bodily injury claims.
B
A plumbing contractor has a commercial general liability (CGL) policy that contains no endorsements. Which one of the following claims would be covered by the CGL? A) An improperly installed pipe was damaged when tested for leaks by an employee of the plumbing contractor. B) An employee of the plumbing contractor damaged a building while installing a waterline. C) An employee of the plumbing contractor was injured while installing a hot water heater. D) An employee of the plumbing contractor damaged a building with the contractor's auto
B
An employee of an appliance store is injured while demonstrating the use of a stove for sale on the sales floor. The employee files a suit against the stove's manufacturer. It is then discovered that the store had made repairs to the stove prior to the employee's injury. The manufacturer subsequently files suit against the store for negligence in repairing the stove. This situation is best described as: A) Dual-capacity doctrine. B) Third-party-over action. C) Exclusive remedy. D) Co-employee doctrine.
B
Bodily injury was caused to customers by fumes that escaped from heating equipment belonging to the Reynolds Corporation. Which one of the following statements describes the reason there would or would not be liability coverage for these injuries under the corporation's unendorsed Commercial General Liability Coverage Form? A) Coverage would be excluded because of the pollution exclusion. B) There would be coverage because the pollution exclusion has an exception that applies to bodily injury caused by fumes from heating equipment. C) Coverage would be excluded because of the impaired property exclusion. D) There would be coverage because the impaired property exclusion has an exception that applies to bodily injury caused by fumes from heating equipment.
B
Nathan's Furniture Store delivers a sofa to a customer. While placing the sofa in the living room, the delivery person breaks the customer's coffee table. The delivery person admits that the accident was his fault and the customer requests that a claim be submitted for damage to his personal property. Would the claim be covered under Coverage B—Personal and Advertising Injury Liability of the Commercial General Liability Coverage Form (CGL)? A) Yes, because personal property and personal injury are covered under Coverage B of the CGL. B) No, because Coverage B does not respond to liability claims for property damage. C) Yes, because the insured admits that the accident was his fault. D) No, because Coverage B will not provide coverage for damage related to the unloading of an auto
B
One of the exclusions in Part A of the Commercial General Liability Coverage Form is for expected or intended injury. However, there is one exception to this exclusion that applies to bodily injury arising from which one of the following? A) An action of an employee B) The use of reasonable force to protect persons or property C) Self-inflicted injuries by a dissatisfied customer who is mentally ill D) A person testing a new product as long as the person is not paid to conduct the test
B
Railroad owners commonly require contractors to purchase a Railroad Protective Liability Coverage Form. Which one of the following statements about this form is true? A) The named insured includes the railroad owner as well as a designated contractor that performs work for a railroad. B) One of the coverage limits applies to physical damage to property owned by or leased or entrusted to the railroad. C) The form provides coverage for bodily injury that occurs after a contractor's work is completed. D) There is an exclusion for the railroad's obligations under the Federal Employers' Liability Act,
B
The Commercial Lines Manual requires which one of these endorsements to be added to any policy containing a commercial liability coverage part? A) Electronic Data Liability endorsement B) Nuclear Energy Liability Exclusion endorsement C) Exclusion—Explosion, Collapse, and Underground Property Damage endorsement D) Exclusion—Volunteer Workers endorsement
B
The ISO commercial general liability program includes specialty coverage forms that address special liability situations. One of those coverage forms, the Railroad Protective Liability Coverage Form, is meant to: A) Insure railroad operators against liability from accidents, similar to how commercial auto insurance protects businesses from liability arising from auto accidents. B) Protect a railroad owner against liability arising out of work done by contractors on the railroad's property. C) Provide employee benefits liability coverage for railroad service companies subject to the federal Railway Workers Act. D) Provide products and completed operations coverage for architects and engineers engaged in the construction of railway bridges and overpasses.
B
The Supplementary Payments section of the Commercial General Liability Coverage Form includes the cost of bail bonds required because of accidents or traffic violations arising out of the use of any vehicle to which the bodily injury liability coverage applies. The limit for this supplementary coverage is: A) $100. B) $250. C) $1,000. D) $2,500.
B
The insuring agreement in Coverage A of the standard Commercial General Liability (CGL) Coverage Form includes language that addresses legal expenses for claims covered by the policy. Which one of the following statements regarding the insurer's legal defense obligations is most accurate? A) An insurer's duty to defend ends when the combined cost of legal expenses and damages reaches the applicable policy limits. B) An insurer's obligation to defend ends when the applicable limits of insurance have been exhausted. C) Legal expenses paid to outside, independent counsel end when the limits of insurance are exhausted, but the insurer's obligation to defend using in-house counsel continues without limit. D) There is a separate limit established for legal expenses, and once that limit is reached the insurer's duty to defend ends, even if no damages have yet been awarded.
B
The primary purpose of the Aircraft, Auto, or Watercraft exclusion in the Commercial General Liability (CGL) coverage form is to: A) Prevent coverage for uninsurable loss exposures. B) Defer to other insuring forms that are more appropriate. C) Protect the limits under the CGL. D) Eliminate duplicate coverage from the CGL.
B
The supplemental payments section of the Commercial General Liability coverage form is most correctly defined as: A) Specified costs the insurer will pay as part of any claim the insurer investigates or defends under any coverage part of the Commercial General Liability policy. B) Specified costs the insurer will pay as part of any claim the insurer investigates or defends under Coverage A or B. C) Unspecified costs that the insurer will pay as part of any claim the insurer investigates or defends under Coverage A or B. D) Unspecified costs the insurer will look to be reimbursed from the negligent party to any claim the insurer investigates or defends under Coverage A or B.
B
Under the Commercial General Liability (CGL) Coverage Form, medical payments coverage applies to which one of the following? A) Anyone hired to do work for an insured or for a tenant of an insured. B) A volunteer worker of the named insured. C) A person injured while taking part in athletic contests. D) A person injured on that part of the named insured's premises that the person normally occupies.
B
Which one of the following statements about Coverage A of the Commercial General Liability (CGL) Coverage Form is true? A) Coverage for bodily injury liability excludes damages for claims arising from sickness and disease unless such coverage is added by endorsement. B) Coverage for property damage includes the loss of use of tangible property that is not physically injured. C) The insurer may be required to pay certain bodily injury or property damage claims even if one or more exclusions applies to the claim. D) Bodily injury or property damage arising from any intentional act is excluded.
B
Which one of the following statements about certificates of insurance is true? A) They often amend or alter coverage afforded by the listed policies. B) They may be prepared by either an insurer or a producer. C) They are a type of policy endorsement. D) They usually confer broad rights upon the certificate holder.
B
Which one of the following statements about the Employee Benefits Liability Coverage Form is true? A) It must be written with an occurrence coverage trigger. B) It has an aggregate limit and a per-employee limit. C) It covers claims based on breach of contract. D) It provides coverage for both bodily injury and property damage.
B
Which one of the following statements about the Liquor Liability Coverage Form is true? A. It provides coverage for bodily injury only. B. It contains an each common cause limit as well as an aggregate limit. C. It contains a deductible that applies only if injury arises when a required liquor license is not in effect. D. It provides product liability coverage for the named insured.
B
Which one of the following statements about the general aggregate limit of the Commercial General Liability (CGL) Coverage Form is most accurate? A) There is a separate general aggregate limit for Bodily Injury and another one for Property Damage, and the sum of those two limits form the products-completed operations aggregate limit. B) The general aggregate limit is applied to the sum of damages from Coverage A other than products-completed operations damages, plus damages under Coverage B plus damages under Coverage C. C) The general aggregate limit is applied to Coverage A and Coverage C only, as a separate aggregate limit is applied to Coverage B. D) The general aggregate limit is typically set at half the products-completed operations aggregate limit in order to minimize total premiums.
B
Which one of the following supplementary payments under the Commercial General Liability Coverage Form is subject to a specified dollar limit? A) Prejudgment interest awarded against the insured on the part of the judgment the insurer pays. B) Loss of earnings resulting from the insured being away from work at the insurer's request to assist the insurer in investigating or defending claims. C) All expenses incurred by the insurer, such as fees charged by outside defense counsel. D) All court costs taxed against the insured in a suit.
B
Which one of these endorsements to the Commercial General Liability Coverage Form provides coverage for damages resulting from negligent acts, errors, or omissions in administering the insured's benefits program? A) Personal and Advertising Liability endorsement B) Employee Benefits Liability Coverage endorsement C) Additional Insured—Property Owner endorsement D) Electronic Data Liability endorsement
B
Which one of these is excluded under the Damage to Property exclusion? A) Contractual liability B) Work that was incorrectly performed C) Electronic data D) Aircraft, autos, or watercraft
B
Which one of these statements does not apply to an Additional Insured—Owners, Lessees or Contractors—Automatic Status When Required in Construction Agreement endorsement to the Commercial General Liability Coverage Form? A) This endorsement provides coverage in construction agreements for an additional insured without the requirement to name the additional insured. B) This endorsement extends coverage to include any injury or damage arising from professional, architectural, engineering, or surveying services. C) This endorsement provides coverage for the liability of the additional insured only for damage arising from the named insured's performance of operations for the additional insured. D) This endorsement provides coverage to the extent legally permitted and cannot be broader than the coverage required under a contract.
B
The Grey Corporation has a Commercial General Liability Coverage Form with the following limits: -Each Occurrence $1,000,000 -Damage to rented premises $100,000 each occurrence -Medical expense $5,000 any one person -Personal and advertising injury $1,000,000 any one person or organization -General aggregate limit $2,000,000 -Product/completed operations aggregate limit $2,000,000 Assuming the policy is written on an occurrence basis, how much of the general aggregate limit, if any, remains if the following claims have been paid under the policy? -a premises/operations liability claim of $600,000 -a products liability claim of $1,200,000 $3,000 of medical expenses to a customer injured on the premises. -a personal and advertising injury liability claim of $300,000 A) $200,000 B) $1,097,000 C) $1,397,000 D) The aggregate limit has been exhausted because the total claims exceed $2,000,000.
B EXPLANATION: The general aggregate is reduced by any amounts paid under Coverages A, B, and C, except for those that arise out of products/completed operations. Therefore, the general aggregate limit is reduced by $600,000 + $3,000 + $300,000 = $903,000. This leaves $1,097,000 of the general aggregate limit remaining.
The Grey Corporation was founded three years ago and purchased an occurrence version of the Commercial General Liability Coverage Form. Each year, the corporation has changed insurers but has purchased the same type of form without any gaps in coverage. During year 1, the company completed work that resulted in an injury to a customer in year 2. However, the customer did not make a claim for damages until year 3. Which of Grey's forms will respond to this loss? A) The form in force in year 1 when the work was completed B) The form in force in year 2 when the injury occurred C) The form in force in year 3 when the claim was made. D) The forms in force in years 1 and 2 in proportion to their coverage limits
B EXPLANATION: If a form is written on an occurrence basis, it will respond to claims made for damages that occurred during the policy period. Therefore, the form that will respond is the one that was in force during year 2.
As the result of an occurrence, a Commercial General Liability Coverage Form paid the following: -$470,000 judgment under Coverage A—Bodily Injury and Property Damage Liability -$90,000 in defense costs related to the Coverage A judgment -$20,000 in claims under Coverage C—Medical Payments The form has a general aggregate limit of $2,000,000. How is this limit affected by the above payments? A) The limit is reduced by $470,000. B) The limit is reduced by $490,000. C) The limit is reduced by $560,000. D) The limit is reduced by $580,000.
B EXPLANATION: The limit is reduced by amounts paid for injuries under Coverages A and C. Defense costs do not reduce aggregate limits. Therefore, the limit is reduced by $470,000 plus $20,000, or $490,000.
A company owns land that is used as a softball diamond and recreational park for hosting employee picnics. Once a year the company also allows a non-profit organization to hold a softball game on these premises. During this year's softball game, the director of the non-profit was injured when a softball hit him in the head. He asked the company that owns the land to pay for his trip to the emergency room. The company's unendorsed Commercial General Liability policy: A) Pays for the director's injuries sustained up to the Coverage C limit. B) Pays up to the per occurrence liability limit for the director's injuries sustained. C) Does not respond to the director's injuries sustained because they happened during an athletic event. D) Does not respond to the director's injuries sustained because of the volunteer exclusion.
C
A customer falls while walking up the stairs of an insured establishment and files a claim against the insured. Which one of the following is covered by the Commercial General Liability Coverage Form's Supplemental Payments section? A) $100 charge for the ambulance to transport the claimant to the hospital. B) $175 invoice for the contractor to install a handrail on the steps to bring them up to building code. C) $200 per day for the insured to assist the insurer with investigating the claim. D) $250 charge for medical treatment administered by the insured to the claimant.
C
A software company whose main business is designing and providing borders and frames on websites is sued for libel along with the website's host. The software company has an unendorsed Commercial General Liability policy and submits this claim to its insurer. Which one of these responses best describes the probable response the software company will receive from its insurer? A) There is no coverage under Coverage B because the exclusion relating to insureds in media and Internet-type businesses excludes coverage for insureds whose business is providing Internet searches, access, content, or services. B. There is no coverage under Coverage B because the exclusion relating to electronic chat rooms or bulletin boards excludes coverage for any injury arising out of an electronic chatroom or bulletin board the insured owns, hosts, or controls. C) There is coverage under Coverage B because the exclusion regarding insureds in media and Internet-type businesses specifically states that placing frames, borders, links, or advertising material for the named insured or others anywhere on the Internet is not considered the business of advertising, broadcasting, publishing, or telecasting. D) There is coverage under Coverage B because the Commercial General Liability policy specifically covers the software company for injury resulting from oral or written publication, in any manner, of material that slanders or libels a person or organization.
C
Argot Industries carries an unendorsed Commercial General Liability (CGL) policy with a $1,000,000 per occurrence limit. As part of an employee reward program, Argot rents a 25 foot fishing boat, with captain and crew, to take its five top sales people on an employer sponsored fishing trip. While the boat navigates away from the marina, it accidentally collides with a 75 foot yacht that is moored. The owner of the damaged yacht sues the fishing boat company and Argot for damages. Is any coverage for this incident afforded under Argot's CGL policy? A) No, boating activities are outside of Argot's standard business operations and thus excluded from the CGL. B) Yes, non-owned watercraft liability is included as part of the unendorsed CGL as long as the insured is not in the marine business. C) Yes, the fishing boat is less than 26 feet long and is not used by Argot to carry property or people for a charge. D) No, the damaged boat was moored and watercraft liability only applies to vessels in movement.
C
Eric recently purchased a new gas grill directly from a small manufacturer in his hometown. The first time Eric used the grill, it exploded. Not only was the grill destroyed, but Eric was injured and his home damaged. The manufacturer had a Commercial General Liability Coverage Form with no endorsements. Which one of the following statements describes how the manufacturer's policy will respond to this loss? A) None of the losses are covered, because they resulted from damage to the insured's product. B) Only the injuries to Eric are covered, and the other losses are excluded by the form. C) Eric's injuries and the damage to his house are covered, but the damaged to the grill is excluded by the form. D) All the losses are covered, because there are exceptions to any exclusions that might apply.
C
Shady Stories, a tabloid newspaper, prints a false story about a local politician. Shady knows the story is false but thinks it will sell a lot of papers. The politician claims damages from Shady. Shady's Commercial General Liability (CGL) Coverage Form excludes coverage for this loss because the claim arose out of which one of the following? A) Shady's work product B) Breach of an implied warranty C) Written material that was known to be false D) Willful violation of a penal statute
C
The Alpha Corporation formed a new subsidiary, which is also a corporation. Alpha's Commercial General Liability Coverage Form provides coverage for such a new corporation for a limited period of time. Which one of the following statements describes how long Alpha has automatic coverage for the new subsidiary. A) There is coverage for thirty days, even if the policy expires before that time. B) There is coverage for sixty days or to the end of the policy period, whichever is the longest. C) There is coverage for ninety days or to the end of the policy period, whichever comes first. D) There is coverage for 120 days as long as the insurer receives a letter of intent to add coverage.
C
The Coverage B—Personal and Advertising Injury Liability of the Commercial General Liability (CGL) Coverage Form parallels the Coverage A insuring agreement, but personal and advertising injury applies to an: A) Accident arising from the insured's business. B) Occurrence arising out the named insured's business. C) Offense arising out of the named insured's business. D) Physical injury arising from the insured's business.
C
The Snow Corporation has an expired ISO claims-made Commercial General Liability Coverage Form that has an extended reporting period in effect as well as a retroactive date. The form will cover claims first made during this extended period as long as the insured event occurred during which one of the following periods? A) During the policy period only B) On or after the retroactive date and prior to the policy's effective date C) On or after the retroactive date and before the policy's expiration D) On or after the retroactive date and up to and including the date the claim is made
C
The Wier Corporation has a Commercial General Liability Coverage Form. Which one of the following statements correctly describes the extent, if any, to which stockholders of the corporation are insureds for liability coverage under the policy? A) They are specifically excluded from coverage. B) They are excluded from coverage if they are also classified as employees of the corporation. C) They are insureds, but only with respect to their liability as stockholders. D) They are co-insureds for any actions brought against the corporation.
C
The purpose of the Contractual Liability—Railroads endorsement (CG 2417) to the Commercial General Liability Coverage Form is to: A) Comply with the Railroad Workers Liability Act if the insured is engaged in interstate commerce. B) Eliminate liability coverage that is provided elsewhere under policies that apply to the transportation of goods by railroad. C) Provide coverage for liability assumed in an easement or license agreement in connection with operations within 50 feet of a railroad. D) Provide coverage for liability arising out of railroad accidents on the insured's premises.
C
Which one of the following statements about the Owners and Contractors Protective Liability Coverage Form is true? A) It provides coverage that is secondary to any other insurance available to the named insured. B) It has a claims-made trigger. C) It is purchased by a contractor but lists a project owner as the named insured. D) It provides coverage for completed operations for up to two years after a project is finished.
C
Which one of the following statements about the Supplementary Payments section of the Commercial General Liability Coverage Form is true? A) Any payments made by the insurer reduce the policy's limit of insurance. B) The insurer is obligated to provide certain types of bonds. C) The supplementary payments are payable as the result of the insurer defending a suit, even if no claim is paid. D) Payments for court cost are limited to 50 percent of a court's actual assessment as a method of encouraging the insured to help minimize such costs.
C
Which one of the following statements best describes the basic requirement for triggering coverage under the ISO claims-made Commercial General Liability (CGL) Coverage Form? A) The loss must occur after the retroactive date but before the policy period, and the claim must be made during the extended reporting period. B) The loss must occur during the extended reporting period and the claim must be made before the retroactive date. C) The loss must occur after the retroactive date and the claim must be made during the policy period or during the extended reporting period. D) The loss must occur before the retroactive date and the claim must be made during the policy period.
C
Which one of the following statements concerning the exclusions commonly found in Coverage A of the ISO Commercial General Liability (CGL) Coverage Form is most accurate? A. The Contractual Liability exclusion for assumed liability only applies to liability assumed by the named insured, but does not apply to any of the named insured's employees. B. The Expected or Intended Injury exclusion only applies if the intended injury occurs on the premises of the named insured. C. The Liquor Liability exclusion only applies if the insured is in the business of manufacturing, distributing, selling, serving, or furnishing alcoholic beverages. D. Although there is a Pollution Exclusion in the basic CGL policy, the pollution exclusion only applies to the intentional release of pollutants, so there would be coverage for an accidental discharge by the insured.
C
Which one of the following statements is true regarding Coverage C — Medical Payments of the Commercial General Liability policy? A) Medical payments coverage is liability insurance because it pays only if the insured is legally liable. B) Medical payments coverage provides high limits of insurance for bodily injury losses. C) Medical payments coverage is a means of making prompt settlements. D) Medical payments coverage applies to bodily injury to any insured.
C
ABC Contractors has a standard Commercial General Liability (CGL) Coverage Form with the following limits of coverage: -Each occurrence: $1,000,000 -Damage to rented premises: $100,000 (each occurrence) -Medical expense: $5,000 (any one person) -Personal and advertising injury: $1,000,000 (any one person or organization) -General aggregate limit: $2,000,000 -Products/completed operations aggregate limit: $2,000,000 Bob, an ABC employee, was using a jackhammer to break up a concrete slab on the ABC premises when he accidentally ruptured a hidden gas line. The resulting explosion sent Bob to the hospital, along with Fred and Ginger, two bystanders who were passing the site at the time of the explosion. Bob sustained $8,000 of medical expenses. Fred and Ginger sustained $3,000 and $12,000 respectively. The jackhammer, valued at $1,800, was destroyed in the incident. Based on the coverage limits, which of the following statements about ABC's insurance reimbursement is most accurate? A) The damage to the jackhammer will be covered as property damage liability and the injuries to Fred and Ginger will be covered as bodily injury liability, but Bob's injuries are excluded. B) Medical payments under Coverage C will be limited to $5,000 because of the aggregate limit per occurrence. C) ABC's insurance company will pay $3,000 for the medical injuries to Fred and $5,000 for the medical injuries to Ginger under Coverage C— Medical Payments. D) ABC's insurance company will pay all $24,800 of damages because they fall within the $1,000,000 occurrence limit.
C EXPLANATION: ABC's insurance company will pay $8,000 for the medical injuries to Fred and Ginger under Coverage C—Medical Payments.
Smart Endeavors, a retail clothing store, hired ABC Contractors to install a new air conditioning system in one of its stores. ABC misrouted some wires during the installation process, which caused the wires to overheat and caused a fire. The air conditioning unit had to be rewired, which cost $1,000. Smart Endeavors' building sustained $30,000 worth of damage and $40,000 worth of inventory was damaged by smoke. Smart Endeavors was closed for two weeks and lost $10,000 in profits during that period. ABC has liability insurance under a standard Commercial General Liability (CGL) Coverage Form with $1,000,000 per occurrence limits. Which one of the following statements concerning coverage for damages under Coverage A of the CGL is most accurate? A) ABC will pay $81,000 for all of the physical damage to the building and inventory, the air conditioning rewiring costs, and Smart Endeavors' lost profits. B) ABC will pay $30,000 for the damage to the building as well as $1,000 for the air conditioner rewiring and $10,000 for the lost profits, but will not pay for the smoke damage to the inventory because smoke pollution is excluded by the Pollution Liability Exclusion. C) ABC will pay $80,000 for the fire damage to the building and inventory as well as the lost profits, but the CGL excludes the cost of work that was incorrectly performed, which means the $1,000 rewiring costs are excluded. D) ABC will pay $71,000 for the damage to the physical property, but Coverage A of the CGL excludes coverage for intangible property such as lost profits.
C EXPLANATION: ABC will pay $80,000 for the fire damage to the building and inventory as well as the lost profits, but the CGL excludes the cost of work that was incorrectly performed, so the $1,000 rewiring costs are excluded.
An insured rents half of a strip mall for its operation as a bakery. The other half of the strip mall is rented by a tax preparation service. One night a bakery employee leaves an oven on and a fire ensues. The bakery has a CGL policy with a per occurrence limit of $2 million, an aggregate limit of $4 million, and a Fire Legal Liability limit of $1 million. DAMAGES: Bakery property: $500,000 Tax preparation property: $200,000 Tax preparation computer records: $50,000 Building occupied by bakery: $800,000 Building occupied by tax preparer: $300,000 What will the insurer pay for the fire under the bakery's CGL Coverage A? A) $1.15 million B) $1.2 million C) $1.3 million D) $1.35 million
C EXPLANATION: The insurer will pay $1.3 million. No coverage for electronic data or the insured's owned property. Fire liability limit only applies to portion of building rented by insured.
After a retroactive date has been established for a claims-made policy, the ISO Commercial Lines Manual rules limit the ability of the insurer to advance the retroactive date. Which one of the following situations would be grounds for advancing the retroactive date? A) The policy is renewed. B) The policy's extended reporting period is breached. C) A claim is made. D) The insured changes insurers.
D
An employee of a manufacturing plant is injured by a defective blade manufactured by the employer. Although workers compensation is considered the exclusive remedy for an employee injured in the course of employment, the injured worker may be able to sue the employer under the: A) Occupational disease benefits law. B) Third-party-over action coverage. C) Contractual liability coverage. D) Dual-capacity doctrine.
D
An employee, while working for the Brown Corporation, was negligent when lighting a cigarette and started a small fire that caused a fellow employee's clothes to catch fire. The injured employee suffered burns as well as the loss of clothes. To what extent, if any, does the corporation's Commercial General Liability Coverage Form provide coverage for the negligent employee if he is sued by the injured employee? A) There is coverage for the negligent employee because he is an insured under the corporation's policy for both bodily injury liability and property damage liability. B) There is partial coverage for the negligent employee because he is an insured with respect to the bodily injury claim, but not with respect to the property damage claim. C) There is partial coverage for the negligent employee because he is an insured with respect to the property damage claim, but not with respect to the bodily injury claim. D) There is no coverage for the negligent employee because he is not an insured under the policy for bodily injury to a co-employee or damage to such an employee's property.
D
An endorsement that eliminates the liquor liability exclusion and provides coverage for organizations in the business of selling or serving alcoholic beverages is an example of which type of endorsement? A) Endorsement for amending limits B) Additional coverage endorsement C) Classification endorsement D) Miscellaneous coverage amendment endorsement
D
An organization purchased a Commercial General Liability (CGL) Coverage form. After reviewing the policy's coverage terms and conditions, the risk manager determines that the organization can retain additional risk and requests the insurer to endorse its CGL coverage to allow a per-occurrence deductible. Which one of these endorsements will the insurer use to satisfy the risk manager's request? A) The Additional Insured—General Contractor endorsement B) Exclusion—Coverage C—Medical Payments endorsement C) Electronic Data Liability endorsement D) Deductible endorsement
D
As part of Coverage A of the Commercial General Liability Coverage Form an insurer agrees to defend the insured against suits seeking damages covered under the policy. Which one of the following statements about this obligation of an insurer is true? A) A suit is defined to include formal lawsuits only. B) The insurer must receive the insured's permission to settle a suit. C) The cost to defend suits is payable even if the payment of damages may be excluded elsewhere in the policy. D) The wrong that lead to the suit may have been committed by another person for whose conduct the insured is vicariously liable.
D
CIK Corporation has a Commercial General Liability Coverage Form that contains no endorsements. John is a real estate agent who acts as the corporation's real estate manager, but he is not an employee of CIK. When he was performing his duties in Puerto Rico, John accidentally caused injury to an independent contractor who was remodeling a building that CIK was intending to lease. Explain whether there is coverage for John if he is sued by the injured contractor. A) There is no coverage because the accident occurred outside the continental United States. B) There is no coverage for John because he is not an employee of CIK. C) There is no coverage because CIK had yet to take possession of the building. D) John is covered because he is an insured, and there is nothing to exclude coverage.
D
Coverage A of the Commercial General Liability (CGL) coverage form responds to damages resulting from: A) Intended injury. B) Personal or advertising Injury. C) Pure financial loss. D) Bodily injury or property damage.
D
GoodBurgers, a manufacturer of pre-cooked frozen hamburger patties, has a standard Commercial General Liability (CGL) Coverage Form issued by ABC Insurance. During processing, an intoxicated worker dropped a wrench into the meat grinder which then spit metal shavings into a batch of patties. Quality control failed to detect the tainted shipment, and several customers were injured when they ate the burgers. An internal investigation led to the firing of the at-fault worker, but Goodburgers incurred significant costs when they were forced to recall thousands of cases of their products. Which one of the following statements concerning coverage for these losses under Coverage A-Bodily Injury and Property Damage Liability of the standard CGL is most accurate? A) Because the incident was alcohol-related, the Liquor Liability Exclusion in Coverage A would exclude coverage for this claim. B) Although excluded from Coverage A, the costs of the recall would be covered under Coverage B - Personal and Advertising Injury. C) The damage caused by the tainted meat products would be excluded under the Damage to Your Work exclusion in the CGL policy, but the cost of the recall would be covered. D) The injuries to the product consumers would be covered, but the cost of the product recall cost would be excluded.
D
Section II—Who Is an Insured identifies the persons and organizations that qualify as insureds under the Commercial General Liability (CGL) Coverage Form. Which one of the following statements regarding who is considered an insured is most accurate? A) Although employees of a corporation that is listed as a named insured are automatically considered to be insureds under the CGL, executive officers are not and must be insured under a Directors and Officers Liability policy. B) The Definitions section of the CGL specifically defines employees to include temporary workers and excludes leased workers. C) Paid employees of the named insured are considered insureds as long as they performing duties related to the conduct of the named insureds business, but volunteer workers and family members who work without pay are not. D) When a CGL policy covers one or more individuals as named insureds, any person or organization having proper temporary custody of the named insured's property following the named insured's death is an insured.
D
The Supplementary Payments section of the Commercial General Liability (CGL) Coverage Form contains provisions concerning the insurer's duty to defend indemnitees of the insured, but only if specific conditions are met. Which one of the following is one of these conditions? A) The indemnitee rather than the insured must be named in the suit. B) The insured cannot have assumed a contractual relationship to defend the indemnitee under an insured contract. C) The indemnitee agrees not to perform any duties in the defense that are similar to the duties that any other insured would have to perform. D) The indemnitee and the insured must ask the insurer to conduct and control the defense.
D
The term "long-tail claim" refers to which one of the following? A) A claim that will take more than one-year to settle B) A claim with several triggering events for the same occurrence C) A claim covered under two or more policies D) A claim with an extended delay between the claim's triggering event and the reporting of the event to the insurer
D
When driving home after a company-sponsored holiday party held at the company conference center, a guest of an employee is involved in a serious automobile accident. The guest sues the company for damages, alleging the company should not have served the guest so many alcoholic beverages. Which one of the following is an accurate determination of coverage under the Commercial General Liability (CGL) coverage form? A) Coverage would apply because of the "insured contract" exception to the Contractual Liability exclusion. B) Coverage would not apply because the dual-capacity doctrine would bring the Employers Liability exclusion into effect. C) Coverage would not apply because of the Aircraft, Auto or Watercraft exclusion. D) Coverage would apply because of the host liquor liability exception to the Liquor Liability exclusion.
D
Which one of the following statements about the general aggregate limit under a Commercial General Liability (CGL) Coverage Form is true? A) It provides additional benefits for a claim if the occurrence limit is exceeded. B) It includes any defense costs paid under the policy. C) It is reduced by the amount of any claims paid for completed operations. D) It is reduced by an claims paid for medical payments under Coverage C.
D
Which one of the following statements concerning the Damage to Your Product and Damage to Your Work exclusions in Coverage A of the Commercial General Liability Coverage Form is most correct? A) These exclusions only apply to products or work that are in the care, custody and control of the named insured at the premises location listed in the declarations page. B) There are two exceptions to this exclusion which are meant to provide limited property damage coverage for minor claims that would fall below the deductible of the named insured's property insurance policy. C) The exclusions only apply to work or products that were damaged by subcontractors or outside parties who are expected to have their own insurance coverage, but the exclusions do not apply to damage done by the named insured. D) These exclusions only apply to damage to the work or product itself, but do not apply to any subsequent damage or injury that was caused by the product.
D
Which one of the following would be excluded under Coverage B—Personal and Advertising Injury Liability of the Commercial General Liability (CGL) policy? A) The use of another's advertising idea in the insured's advertisement B) Written publication of material that violates a person's right of privacy C) Malicious prosecution D) An offense committed by an insured whose business is broadcasting
D
Which one of these is an insured contract within the meaning of the definition of "insured contract" in the CGL coverage form? A) A warranty contract for product performance B) An indemnification contract with an architect for injury or damage arising out of his or her professional services C) A builders contract covering the building of a single-family residence D) An indemnity agreement with a municipality covering the use and maintenance of a sign
D
Which one of these offenses would not be considered a personal and advertising injury under Coverage B of the Commercial General Liability Coverage Form? A) Malicious prosecution. B) Wrongful eviction from a dwelling or premises that a person occupies. C) An organization's unauthorized use of another's advertising idea in an advertisement. D) Refusing to hire a qualified job applicant because of his ethnicity.
D
Which one of these pollution exposures would be covered under the Commercial General Liability coverage form? A) A tanker truck carrying a toxic chemical overturns, and the chemical contaminates the town's drinking water. B) A chemical manufacturer spills twenty gallons of its product into an adjacent river. C) A pipe carrying chlorine from one building to another within a chemical plant ruptures, releasing a chlorine gas cloud. D) A gas fired boiler in a high-rise office building malfunctions, and a release of carbon monoxide throughout the building follows the malfunction.
D
ABC Emporium is a malt shop and novelty store with a large teenaged clientele. Fred, an employee at ABC, noticed a teenage patron acting suspiciously. Suspecting shoplifting, Fred followed the teen out the front door down the street. When the teen noticed Fred following her, she bolted towards a parked car, whereupon Fred tackled her from behind, knocking her to the pavement. Unfortunately, the teenager that Fred tackled had not shoplifted anything and was merely startled by Fred's bizarre antics. Her parents, both attorneys, immediately filed a lawsuit against ABC seeking $550,000 in damages. The lawsuit asked for $2,000 for direct medical expenses from the emergency room visit following the incident and another $48,000 for counseling for the teenager, who was traumatized by the incident; and $500,000 for the humiliation and loss of reputation of the parents who were exposed to ridicule in their community because of the shoplifting allegations that lead to their daughter's injuries. ABC has a standard Commercial General Liability (CGL) Coverage Form with the following limits: Each occurrence: $1,000,000 Damage to rented premises (each occurrence): $100,000 Medical expense (any one person): $5,000 Personal and advertising injury (any one person or organization): $1,000,000 General aggregate limit: $2,000,000 Products/completed operations aggregate limit: $2,000,000 Which one of the following statements about coverage under the standard CGL is most accurate? A) The only insurance coverage applicable would be Coverage A—Bodily Injury, but it only provides insurance coverage for premises liability and these injuries occurred off of ABC's premises. B) Coverage C—Medical Payments would respond to the $2,000 of first aid treatment expenses, but the other damages would not be covered. C) The $2,000 emergency room expenses would fall under Coverage C—Medical Payments; the $48,000 for counseling would fall under Coverage A—Bodily Injury and Property Damage Liability; and there would be no coverage for the $500,000 of alleged pain and suffering. D) The alleged damages are covered under the insuring agreement for Coverage B—Personal and Advertising Liability, and there are sufficient limits to cover $550,000 in damages if ABC is found liable.
D EXPLANATION: the entire $550,000 would fall within the Coverage B—Personal and Advertising Liability.
TRUE/FALSE: Coverage for bodily injury liability excludes damages for claims arising from sickness and disease unless such coverage is added by endorsement.
FALSE; Statement = Incorrect, b/c... Bodily injury is defined to be physical injury to a person, including sickness, disease, and death.
TRUE/FALSE: Fumes from heating equipment are a type of pollution. Although there is a pollution exclusion in the CGL form, the exclusion contains some exceptions. One of these exceptions provides coverage for bodily injury caused by smoke, fumes, vapor, or soot emanating from cooling, heating, or dehumidifying equipment.
TRUE
TRUE/FALSE: If a form is written on an occurrence basis, it will respond to claims made for damages that occurred during the policy period.
TRUE
TRUE/FALSE: The CGL form (with no endorsements) has an exclusion for damage to the insured's product because of its defect. However, the resulting damage is covered.
TRUE
TRUE/FALSE: The coverage territory for most claims under the CGL Policy is the United States, its territories and possessions, Puerto Rico, and Canada.
TRUE
TRUE/FALSE: The exception to the CGL Part A exclusion for expected or intended injury is for bodily injury resulting from the use of reasonable force to protect persons or property.
TRUE
TRUE/FALSE: The exclusion in the CGL for electronic data reinforces the policy definition that electronic data is not considered tangible property.
TRUE
